What's Happening?
Prime Minister Narendra Modi and UK Prime Minister Keir Starmer have signed the India-UK Free Trade Agreement (FTA), aiming to double bilateral trade to $120 billion by 2030. The agreement provides Indian sectors such as textiles, footwear, gems and jewellery, seafood, and engineering goods with better market access in the UK. It also opens opportunities for Indian horticultural products and processed food industries. The FTA is expected to benefit India's youth, farmers, fishermen, and the MSME sector by providing access to UK-made products like medical devices and aerospace parts at more affordable prices. The agreement also enhances opportunities in India's services sector, including IT, financial services, and education.
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Why It's Important?
The India-UK FTA is poised to significantly strengthen economic ties between the two nations, boosting annual bilateral trade by €25.5 billion and adding £4.8 billion to the UK's GDP. It aims to increase wages by £2.2 billion in the long run. The agreement grants duty-free access to the UK market for India's labor-intensive sectors, potentially increasing production and employment in India. A key benefit is the exemption from social security contributions in the UK for Indian professionals working temporarily, which will result in substantial financial savings and enhance global competitiveness.
What's Next?
The FTA is expected to create new avenues for growth, skill development, and employment opportunities for Indian youth across multiple sectors. It will likely lead to increased production and job creation in India, particularly benefiting young workers. The exemption from social security contributions will make international assignments more attractive to Indian professionals, offering valuable global exposure.
Beyond the Headlines
The agreement could lead to long-term shifts in trade dynamics between India and the UK, fostering deeper economic integration and collaboration. It may also influence other countries to pursue similar trade agreements, potentially reshaping global trade patterns.
